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Government approves Prudentia’s investor for airBaltic

BC, Riga, 04.11.2015.Print version
Following debates that lasted four hours, the government on November 3rd eventually approved an investor for the national airline airBaltic that had been suggested by the Prudentia consulting company – the German businessman Ralf Dieter Montag-Girmes, informs LETA.

BC's photo.

He will invest EUR 52 million into the airline, and in turn get a 20% stake in airBaltic, Transport Minister Anrijs Matiss (Unity) told reporters late last night.

 

Prime Minister Laimdota Straujuma (Unity) commented that the government's decision was based on information provided by the Transport Ministry and airBaltic. The government also decided yesterday to give the Transport Ministry two years to find a strategic investor for airBaltic.

 

The investor is to invest EUR 52 million in the airline, while the government will have to invest EUR 80 million, which it will borrow from the State Treasury, said Straujuma. The government's decision will have to be approved by Saeima when it votes on the 2016 state budget bill in the final reading on November 30.

 

Following these investments, airBaltic will have positive equity of EUR 60 million, which will make it possible for the airline to borrow on financial markets, said Matiss.

 

The state investment will have no effect on the state budget's deficit, as the money will go into the airline's capital, increasing the value of airBaltic substantially, explained the minister.

 

Asked to comment about the origin of the German businessman's investment, Matiss said that it would be transferred via Latvian banks, which means that the Financial and Capital Market will have a full picture of the transaction.

 

According to Matiss, the government yesterday discussed ways to reduce risks the deal may carry. "The Transport Ministry will have to ensure that all these risks are addressed in the shareholders' agreement. Our concerns have not been dispelled, but regardless, the investor meets the requirements of the Aviation Law," stressed Matiss.

 

Montag-Girmes will be a financial investor, but work will continue on finding a strategic investor for airBaltic.

 

Montag-Girmes will acquire 20% of the airline's shares, and once a strategic investor is found, it could buy these shares from the German businessman, added Matiss.

 

The shareholders' agreement is yet to be drawn up. What planes airBaltic decides to buy will not be decided by the government, said Matiss.


"If we turned this offer down, other solutions would have to be considered – either larger state support or significant reductions in airBaltic operations. Sometimes you have many options that are not so good, and you have to pick the best of them," the transport minister said.

 

On the other hand, airBaltic CEO Martin Gauss said he was very pleased at the government's decision.

 

"This is the best possible decision the government could have made today. It will give the airline stability and make buying aircraft possible," Gauss said Tuesday night.






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